On January 1, year 1, P Company sold a machine for P900,000 to S Company, its wholly owned subsidiary. P paid P1,100,000 for this machine, which had accumulated depreciation of P250,000. P estimated a P100,000 salvage value and depreciated the machine on the straight-line method over twenty years, a policy which S continued. In P's December 31, year 1 consolidated balance sheet, this machine should be included in cost and accumulated depreciation as

On January 1, year 1, P Company sold a machine for P900,000 to S Company, its wholly owned subsidiary. P paid P1,100,000 for this machine, which had accumulated depreciation of P250,000. P estimated a P100,000 salvage value and depreciated the machine on the straight-line method over twenty years, a policy which S continued. In P's December 31, year 1 consolidated balance sheet, this machine should be included in cost and accumulated depreciation as

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 11E: On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an...

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On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
Bliss Company owns an asset with an estimated life of 15 years and an estimated residual value of zero. Bliss uses the straight -line method of depreciation. At the beginning of the sixth year, the assets book value is 200,000 and Bliss changes the estimate of the assets life to 25 years, so that 20 years now remain in the assets life. Explain how this change will be accounted for in Blisss financial statements, and compute the current and future annual depreciation expense.
The following intangible assets were purchased by Goldstein Corporation: A. A patent with a remaining legal life of twelve years is bought, and Goldstein expects to be able to use it for seven years. B. A copyright with a remaining life of thirty years is purchased, and Goldstein expects to be able to use it for ten years. For each of these situations, determine the useful life over which Goldstein will amortize the intangible assets.
On December 31, Year 4, Prone Inc. sold a piece of equipment to its 90 percent owned subsidiary, Supine Co. Details are as follows: Original purchase date January 1, Year 1 Original cost to Prone $65,000 Original estimate of salvage value $10,000 Original estimate of economic life 5 years $60,000 Intercompany selling price Both companies use straight-line depreciation. Both companies think that, as of the end of Year 4, the equipment's remaining useful life will be four years and the salvage value will become zero. In preparing its Year 5 consolidated financial statements, consolidated depreciation expense will be reduced by: $8,775 $7,800 O $7,020 O $9,750
On January 1, 20X9, Planet Corporation sold equipment for $400,000 to Star Corporation, its wholly owned subsidiary. Planet had paid $900,000 for this equipment, which had accumulated depreciation of $170,000. Planet estimated a $50,000 salvage value and depreciated the tractor using the straight-line method over 10 years, a policy that Star continued. In Planet's December 31, 20X9, consolidated balance sheet, this tractor should be included in fixed-asset cost and accumulated depreciation as: Cost AccumulatedDepreciation A. $ 900,000 $ 255,000 B. $ 900,000 $ 120,000 C. $ 730,000 $ 85,000 D. $ 730,000 $ 170,000 Option A Option B Option C Option D
Madison Company acquired equipment on January 2, Year 1, at a cost of $20 million. The equipment has a five-year life, no residual value, and is depreciated on a straight-line basis. On January 2, Year 4, Jefferson Company determines the fair value of the asset (net of any accumulated depreciation) to be $12 million. Assuming that (1) the revaluation model is used for measurement subsequent to initial recognition under IFRS and (2) US GAAP: Depreciation expense for Year 4 will be: Select one:a. US GAAP: 2000,000 IFRS 4,000,000b. US GAAP: 4000,000 IFRS 6,000,000c. US GAAP: 4000,000 IFRS 4,000,000d. US GAAP: 2000,000 IFRS 2,000,000
Gray Ltd purchased a machine on 1 April 20X2 for GHS 16,000. In the years ended 31 March 20X3 and 31 March 20X4, Gray Ltd depreciated the machine at 25% per annum on a straight-line basis. On April 20X4, the machine was revalued to GHS 12,000 with its estimated useful life being unchanged. In accordance with IAS 16 Property, Plant and Equipment, what was the effect of this revaluation on Gray Ltd’s profit for the year ended 31 March 20X5?
On 1 January 20X8 Hendrix Co revalued its property to $200,000. Up to the date of the revaluation, the asset had been accounted for at a cost of $160,000, and had accumulated depreciation $40,000. The property had an expected useful life of fifty years from the date of purchase and nil residual value. State the accounting entries required to account for the revaluation in the financial statements of Hendrix Co. Debit or Credit Account title $
The net book value of Falcon Inc.'s property, plant, and equipment (PP&E) was $734,550 on January 1, 20Y4, and $658,000 on December 31, 20Y4. During 20Y4, Falcon recognized $50,400 of depreciation expense on the PP&E, acquired $215,800 of new PP&E, and recognized a $5,600 loss on the sale of old PP&E. How much cash did Falcon receive from the sale of PP&E during 20Y4? O $236.350 O $241,950 O $247.550 O $286.750 O None of the above
Barbosa Ltd purchased an item of plant for GHS 300,000 which was to be depreciated over its useful life of 10 years. On 1 January 20X5, the plant was revalued to its fair value of GHS 600,000, with no revision to its remaining useful life. On 1 January 20X6, the plant was sold for GHS 700,000. In accordance with IAS 16 Property, Plant and Equipment, what was the profit on disposal to be included in Barbosa Ltd's income statement for the year ended 31 December 20X6?
Price Corporation acquired 100 percent ownership of Saver Company on January 1, 20X8, for $107.800. At that date, the fair value of Severs buildings and equipment was $18,000 more than the book value. Accumulated depreciation on this date was $2400 Buildings and equipment are depreciated on a 10-year basis. Although goodwill is not amortized, Price's management concluded at December 31, 20X8, that goodwill Involved in its acquisition of Saver shares had been impaired and the correct carrying value was $2.100. No additional impairment occurred in 20X9. Trial balance data for Price and Saver on December 31, 20X9, are as follows Saver Conpany Debit 337,000 23, 00 33,000 34, 000 151,000 Price Corporation Debit 54, S0 91,000 101,00e 70,000 357, 0e 122, 30e 138, e00 14,000 24,0e 11,000 22,000 35, 00 Credit Item Cash Accounts Receivable Inveetory Land uildings tauipnent Investnent in Saver Conpany Cost of doods Sold Mage tapense Depreciation Expense Interest EKpense Other Experses Dividends…
On January 1, 2022, Kenya Company, an 80% owned subsidiary of Oliver, Inc., transferred equipment with a 10-year life (six of which remain with no salvage value) to Oliver in exchange for $78,000 cash. At the date of transfer, Kenya's records carried the equipment at a cost of $100,000 less accumulated depreciation of $40,000. Straight-line depreciation is used. Kenya reported net income of $48,000 for 2022. In preparing financial statements for 2022, how does this transfer affect the computation of consolidated net income?